Tesla: United Auto Workers Start Organizing Push

AP Photo/Ng Han Guan
AP Photo/Ng Han Guan
Newport Beach, CA

The United Auto Workers union announced that it will be targeting Tesla Motor’s Fremont, California factory for unionization efforts, now that the electric vehicle maker plans to ramp up production to over 500,000 units a year.

The UAW allowed Tesla to operate the only American non-unionized assembly plant during the company’s tech start-up phase. But now that the company is poised to take a meaningful market share percentage, the union is beginning an effort to organize workers.

UAW President Dennis Williams told reporters that when it comes to Tesla, “We’re watching that very closely.” He added, “We just believe workers ought to have a voice in the workplace and they ought to have collective bargaining rights.”

Williams stated that he met with Tesla’s CEO Elon Musk, but neither Williams not Musk have offered any details on the nature of their discussion or the issue of unionization.

Tesla is implementing a plan to build 500,000 vehicles a year by 2018. The company is financing the huge expansion by taking in almost $500 million in customer deposits, and filed a registration statement with the SEC last week to sell another $2 billion in stock.

But three quarters of that backlog is coming from its $35,000 Model 3, whichwas just introduced in March. Selling at a third of the $110,000 average price for its luxury Model S and Model X, Tesla must keep its costs down and achieve high productivity to be profitable on the low margin / high volume vehicle.

As a non-union plant, Tesla ha had a terrific advantage over the industry by only having to pay “Production Associates” $17.33 per hour, or about $24 an hour with benefits.

But that compares to North American hourly wages and benefits of $65 for Mercedes-Benz; $58 for General Motors, $57 for Ford, $49 for Honda; $48 for Toyota; $48 for Fiat-Chrysler; $42 for Nissan; $41 for Hyundai-Kia; $39 for BMW and $38 for Volkswagen, according to the Center for Automotive Research.

Elon Musk said in a conference call earlier this month, “We are hell-bent on being the best manufacturer on Earth.”

With a third of sales going to Asia and Europe, and the new risk of unionization doubling wages, Musk also recently said, “It wouldn’t make sense to ship cars from California to those places in such a high volume.”

As Breitbart News noted two weeks ago, Tesla is also under fire after a Bay Area News Group investigation revealed that the company brought in about 140 workers from Eastern Europe and paid them about $5 an hour to build out some facilities.

Musk personally tweeted, “Sounds like the wrong thing happened on many levels” and that Tesla “Will investigate and make it right.”